The invention relates to a circulating fluidized bed refuse incineration boiler and a refuse incineration method thereof. The boiler comprises a steel framework and a hearth body, a middle flue, a tail flue and a boiler barrel which are arranged on the steel framework. A smoke separation device and a return device are arranged in the middle flue; the smoke separation device and the return device are respectively connected with the hearth body; the tail flue and the smoke separation device are connected; vapor-water systems are arranged in the hearth body and the tail flue; the vapor-water systems are connected with the boiler barrel; the hearth body comprises an upper water cooled wall hearth, a lower insulation hearth and a middle insulation hearth, wherein the middle insulation hearth and the lower insulation hearth are hearth structures without heating surfaces and are used for preventing heat loss generated after refuse is burnt so as to make the heat used for preheating and igniting new put refuse. The refuse incineration boiler and the incineration method thereof reduce the operating cost of a refuse power station and enhance the adaptability to refuse quality changes.